Feeds: 
symbol identifies content for paid subscribers only.
STIMULUS AMBIVALENCE.
I'm of mixed feelings on the stimulus bill: The passage of the legislation is heartening, but the specifics of the compromise are depressing. So too was the demonstrated power of the centrists and the effortless unity of Republican opposition. The process did not bode well for more controversial priorities like health care and cap-and-trade.
Perhaps most galling was the shell game of the AMT patch. $70 billion for an upper class tax break. 99.5 percent of the benefits go to the richest 40 percent. And this one provision comprised almost a tenth of the bill. It may be good, or at least popular, tax policy. But it's not stimulus. And Noam Scheiber passes on this bit from Senator Tom Harkin explaining why:
Mr. Harkin said he was particularly frustrated by the money being spent on fixing the alternative minimum tax. “It’s about 9 percent of the whole bill,” he said, “which we were going to do later this year in a tax bill. Why is it in there? It has nothing to do with stimulus. It has nothing to do with recovery. This makes no sense whatsoever.”
As Scheiber says, "At the very least, shouldn't we call it a $719 billion bill rather than a $789 billion bill?" Probably. But this also got to one of the other problems with the bill: So many of the provisions were politically vulnerable in isolation that you couldn't pick through them one by one. It would have meant passing the legislation late next year. The imperative of speed forestalled a thorough analysis.
Many on the right thought this was something the left liked about the stimulus bill: It was a way to ram through a lot of spending very quickly. But it was actually the opposite: It meant there was little ability to affect the overall mix of spending. And so we got a lot of tax breaks and highway construction and housing rebates -- all of which will cost money and constrain thoughtful and priority-driven spending in the later years of Obama's first, and even second, terms. (In this way, I think the stimulus was something of a subtle victory for the right, or at least heralded a subtle structural advantage, but that's a different argument.) It was a mixed bill that was constructed in a disappointing way. The left bought into the theory of stimulus spending, which included speed, and many hoped that the spending side would be built to accomplish an array of long-term priorities in areas like transit. That proved, if not wrong, then not right, either. The final bill included a lot of spending -- most of it genuine stimulus -- but much of it was very different from the sort of spending that the left wanted. If you think of the stimulus bill as having had two questions -- how much spending, and what sort -- I'd say that liberals should feel good about the first and ambivalent about the second.
COMMENTS (10)
Good post, EK. I love how AMT (why was it ever in there??) wasn't ever mentioned, but fish barriers got tons of media. Well played, Dems!
Posted by: Obama -- Not as Tough as the Steelers | February 12, 2009 10:24 AM
IF, big if, the economy shows at least some mild improvement by fall 2010, the midterm election should significantly ease these problems. If we have to wait a couple of years on health care until we have more Senate votes, well, so it goes.
The budgetary "constraints" are basically imaginary (the stimulus bill is a derisory % of GDP) and will cause a lot fewer problems if we can just wrest control of the Senate away from Presidents Nelson and Collins.
Posted by: Steve LaBonne | February 12, 2009 10:30 AM
Does anyone know what, exactly, happened to the BS house and car purchase credits?
Posted by: Obama -- Not as Tough as the Steelers | February 12, 2009 10:38 AM
"all of which will cost money and constrain thoughtful and priority-driven spending in the later years of Obama's first, and even second, terms."
Only if you assume this is the last, not first, stimulus bill. Why would you assume that, Ezra?
Posted by: vorkosigan1 | February 12, 2009 10:44 AM
Because it's going to take at least several months (maybe years) to measure whether the stimulus is having any substantial benefit on the economy, I'm concerned about how ambitious Obama and the Dems will want (or be able) to be in the interim. Is Obama going to be able to dive right into his agenda, or is he going to have to wait for the benefits of the stimulus to accrue to him (i.e. and thus for members of Congress to discern whether being associated with Obama and his stimulus is a good thing for them electorally).
I mean, is health care reform worth having if it's on Ben Nelsons' and Sue Collins' terms? Is half-assed better than nothing?
Posted by: Peter A. Basso | February 12, 2009 10:53 AM
Ezra,
I think you underplay the host of other initiatives that Congress will consider which will have a stimulative effect. The fact is this recession will last a while - going back to the well won't necessarily be called ARRA 2.
When Congress addresses transportation, energy or even SNAP reauthorization and so on through the budgeting process or through new legislation, there's no question in my mind that as much new money will be pushed into those programs as possible. I don't think this is the end of the stimulus actions - they just won't get tossed into a stimulus bill.
Posted by: Tom Laskawy | February 12, 2009 10:55 AM
Tom Laskawy has it right--this is just the beginning of spending/stimulus. A lot of bills will fly further below the radar screen and present fewer opportunities for the Repugs to demagogue things. And, when bills are more targeted it might be easier to pick off individual Repugs to support the issues. It is a lot easier to vote against a huge bill when it is not as clear cut how you are hurting individual constituencies.
Posted by: zyxw | February 12, 2009 11:13 AM
Only if you assume this is the last, not first, stimulus bill. Why would you assume that, Ezra?
Well, all the obstacles the current one faced won't get any easier. Deficit spending bills still require supermajorities, and I'm not sure but I think that's the result of legislation rather than a Senate rule, so they can't change that rule easily either. This early in his term, Obama's approval ratings are about as high as they're going to get until the state of the union improves, so it would be harder to push anything through. (And if the economy improves significantly, a stimulus isn't needed.) Congressmans' incentives to be obstructive or cooperative won't change until the 2010 electoral races or later.
Maybe I'm wrong in some of those assumptions, who knows. But if I'm right, then any future bills will face all the obstacles of this one and proponents with less political capital.
Posted by: Cyrus | February 12, 2009 11:48 AM
"So many of the provisions were politically vulnerable in isolation that you couldn't pick through them one by one."
Actually, I think the reverse is true. It's easy to say that "government spending" in general is wasteful. It's pretty rare that you get a generic spending bill, which is why Republicans seemed to have such good arguments. It's much harder to say that education spending, or infrastructure spending, or health care spending is wasteful. If these are put into separate bills, and sold as solving specific problems rather than as "stimulus", Republicans might feel hard-pressed to vote no. The campaign commercials would write themselves. (think of SCHIP)
Posted by: will | February 12, 2009 2:20 PM
Obama campaigned on passing this exact AMT patch; it was going to happen this year anyway. There aren't any long-ranging effects on future budgets that wouldn't have happened as is.
I crunched the numbers a few days ago for the House/Senate bills but don't know about the final compromise bill: 85% of the Senate tax cuts and 89% of the House tax cuts (the 10-year cost as calculated by the Tax Policy Center) were fulfilling Obama's campaign promises.
I'd like there to be more spending in the bill, too, but outside of a few 10s of billions these cuts were going to pass anyway, and probably this year. This way Democrats can spend two years saying every single Republican voted against tax cuts -- sounds good to me. In fact, the cuts in the stimulus are about as big as the Bush cuts or bigger for the bottom 80%.
Trading the $11B car credit for school construction isn't good, but that's a small part of the total bill--the tax cuts were largely inevitable. Trading spending that'd already passed the House for the AMT was unfortunate, but most of the money lost from the AMT was cut from other tax cuts in order to add back a lot of spending that was axed in the Senate bill (of particular interest to me -- science funding is at the levels in the House bill).
Posted by: Zach | February 12, 2009 2:28 PM